Boursa Kuwait being upgraded to emerging market by FTSE – Interview

KUWAIT: Following the latest meeting of The Financial Times Stock Exchange (FTSE) Russell Governance Board, the FTSE could announce the upgrade of Boursa Kuwait from a Frontier Market to a Secondary Emerging Market and the impact of being classified within this index for Kuwait can mean a significant increase in turnover and foreign investments in the market, said Khaled Al-Khaled, CEO of Boursa Kuwait during an interview on the sidelines of Euromoney conference in Kuwait yesterday. Excerpts:

Question: We have heard that Boursa Kuwait will be upgraded from a Frontier Market to Secondary Emerging Market by FTSE and that there is a potential impact on boosting the foreign investments to Kuwait. Would you kindly provide your views?
Al-Khaled: I would like to thank the CMA who led the way in coordination with Boursa Kuwait and KCC in order to implement the initial infrastructural changes for FTSE initiative.
Following the latest meeting of The Financial Times Stock Exchange (FTSE) Russell Governance Board, the FTSE could announce the upgrade of Boursa Kuwait from a Frontier Market to a Secondary Emerging Market and the impact of being classified within this index for Kuwait can mean a significant increase in turnover and foreign investments in the market.
Playing a major role in this outcome, are the infrastructural changes including the settlement cycle, trading efficiency, transparency and disclosures that were implemented in the market, and the additional services offered such as extended auction, special trades and market makers.

Question: What does this achievement mean for Boursa Kuwait and its investors?
Al-Khaled: The new FTSE status has been a key objective of Boursa since the inception in April last year. It highlights its mission to enhance the current level of performance in Kuwait, enable Boursa Kuwait to compete with regional peers and build a market reflecting the strength, depth and flexibility of the Kuwaiti private sector.
The FTSE classifications will provide investors an objective and consistent approach to the classification of markets with a global context. With the Secondary Emerging Market status, Boursa Kuwait will continue to work in close partnership with the Kuwait Clearing Company to provide sound local and foreign investment opportunities.

Question: We Heard About Market Segmentation. What are the main underlining factors of this Market-Wide Activity?
Al-Khaled: Boursa Kuwait is introducing Market Segmentation for the first time in Kuwait and in the region as a whole. This approach to manage the market, which is an internationally recognized practice undertaken by some of the world’s largest markets, will allow Boursa Kuwait to achieve major changes and improvements in the operations of the exchange.
The market will be segmented into three main categories: Premier, Main and Auction. Each category has been designed based on certain criteria and more importantly, in a means to cater to and accommodate the current Kuwait market status.
Market Segmentation will allow Boursa Kuwait to address major setbacks in the exchange:
* Decline in liquidity.
* Creating an attractive issuer’s base.

Question: What are Boursa Kuwait Continuous Achievements of Boursa Kuwait?
Al-Khaled: Launched an initiative to upgrade the markets infrastructure which includes increasing the settlement cycle to T+3 Settlement, in accordance with The Guidelines of the Capital Markets Authority. Furthermore, this upgrade has led way to successful Implementation of Standardized Corporate Actions, New Tick Size, Increase in Price Limits, Randomized Closing Auction, ability to support Market Maker and Short Selling etc.
* Introduced Special Trades for Listed Shares, which are designed for large volume transactions.
* Introduced the Company Information Portal (CIP) which is a tool designed by Boursa Kuwait with the aim of providing an advanced information platform for all listed companies and to increase transparency.